Prevent M&A Talent Loss

Preparing to sell your business is a huge undertaking, requiring significant due diligence—both formal during the deal and informal before it begins. Leaders invest significant sums into deal success, hiring experts and assembling forecasts. Despite all of this, half of mergers fail. Your odds of success are no better than chance. And it may feel like there’s little you can do to change that. But this may be because many companies pay little heed to the hidden factor that affects so many deals: talent.

It’s a seller’s market in terms of employment right now. Employees are leaving their companies in record numbers. They’re demanding more, and they’re getting it. Businesses that don’t keep up, or that abuse their employees as part of a merger, stand to be left behind.

So what can you do to ensure key talent stays on after closing? Work with the seller to adopt these strategies.

  1. Identify your best employees. Often they’re not the people with the highest earnings or most impressive salaries. They may be individuals with institutional knowledge or those informally performing key roles. Then develop a plan to incentivize them to remain on board—or at least to get them to plan their exit if they intend to leave.
  2. Offer more than just a retention bonus. Retention bonuses are standard operating procedure. But if your culture is awful, management is abusive, and the base pay is no good, recipients of these bonuses will still jump ship as soon as they can. Talk to your team about what they value most and what they like least, then work to adapt the new company’s culture accordingly.
  3. Build the right culture. Culture affects everything about an organization, from what people wear to the norms of how they treat one another. Good cultures keep people for decades, while bad cultures make everyone miserable. Work with the buyer to identify good and bad aspects of current corporate culture, and then ask leaders in the new business to work to develop a new culture that values everyone’s needs.
  4. Develop leaders. Mergers provide an exceptional opportunity to develop new leaders, if you’re willing to put in the work. Encourage emerging leaders to participate in the process, then reward them with promotions on the other side of the deal. Managing due diligence, negotiations, and other complex aspects of an acquisition are exceptional resume boosters that will also bring more value to the new organization. Don’t waste an opportunity to train new leaders.